Since the 1920s, the U.S. economy has often followed a simple pattern: A Republican president wrecks the economy, and a Democratic one fixes it. Of all those Democratic economic fixers, Barack H. Obama may be judged as the best fixer, since he has done well after being dealt one of the worst hands by his Republican predecessor.

While this pattern does not always work, I can think of three Republican presidents who have pursued economic policies that absolutely wrecked the economy, and three Democratic presidents who brought it back.

But before getting into the details, let's consider why my theory of Republicans breaking the economy and Democrats fixing it is imperfect. Republican presidents Dwight Eisenhower and Richard Nixon did not destroy the economy, nor did Democratic presidents John F. Kennedy, Lyndon B. Johnson and Jimmy Carter save it.

In fact, Mr. Johnson, Mr. Nixon and Mr. Carter presided over a period in the late 1960s and 1970s of economic malaise, featuring low economic growth, high unemployment, and high inflation. And much of the blame for that is due to the political distraction of the Vietnam War and the domestic turmoil it caused.

Herbert Hoover was the first Republican president to wreck the economy in the last 90 years. He oversaw the stock market bubble and the wealth inequality that resulted in the collapse of the stock market in 1929. He also decided that the answer to the Great Depression was to liquidate everything and balance the budget by cutting the money supply.

Democratic president Franklin D. Roosevelt spent the next decade trying all sorts of economic spending programs to revive the economy. It is unclear whether these programs really worked to revive the economy — as it appears that getting the U.S. into World War II, with the ensuing spike in production, and the demand created by troops returning to the U.S. after our victory, were the real catalyst for the economic recovery of the 1940s and 1950s.

The 1980s looked like a period of prosperity. But it was based on deregulation, reduced taxes, and increased defense spending, the hallmarks of Republican president Ronald Reagan's economic policies. These strategies led to the boom in junk bonds, which was followed by the collapse of many leveraged buyouts, the banks that lent to them, and the savings and loans that bought so many of the junk bonds that financed these buyouts.

Republican George H. W. Bush helped to balance the budget by raising taxes in his one term, which helped set the stage for Democrat Bill Clinton's two terms. During Clinton's tenure, the U.S. economy boomed — creating 23 million jobs, roughly 4 percent annual economic growth, and a 17 percent annual increase in the S&P 500. In March 2000, Mr. Clinton watched the dot-com bubble burst — sending the NASDAQ on a multi-year plunge.

Republican George W. Bush took the budget surplus that Mr. Clinton left him and turned it into budget deficits that exceeded $1 trillion annually. Mr. Bush cut taxes and spent heavily on wars in Afghanistan and Iraq. During his terms, sub-prime mortgage backed securities expanded and collapsed. Widespread speculation by hedge funds and investment banks resulted in economic inequality not previously seen since 1928 — that came to a head in September 2008 with the near-collapse of the global economic system as Bear Stearns imploded and Lehman Brothers went belly up.

Thanks to a $23.7 trillion bailout — in the form of cash and government guarantees — spearheaded by then Treasury Secretary Henry Paulson, Wall Street was rewarded with bonuses, and the global economy skated by the worst case scenario.

Since taking over in January 2009, Democratic President Obama has pursued a three-pronged strategy that has so far led to record-beating results in the stock market, corporate profits, and corporate balance sheet health. The first prong of Mr. Obama's economic strategy was to reduce the panic.

He helped to do that by keeping Ben Bernanke as Fed Chair, who maintained near-zero interest rates and boosted liquidity through a bond-buying program called quantitative easing; bailing out General Motors from bankruptcy, and helping to push through economic reforms like the Dodd-Frank bill that helped to curb speculation by investment banks.

The second prong of Mr. Obama's strategy was letting companies sell their products in fast-growing emerging markets while simultaneously letting them outsource their operations to countries where workers got paid less. This economic strategy has resulted in rising corporate profits every year since 2010 — while allowing those companies to stock up on cash to record levels approaching $1.7 trillion.

The wealth of these companies contributed to a 17.9 percent average annual rise in the S&P 500, and also kept economic growth at a moribund 2 percent rate and unemployment well-above the healthy 4 percent range. In short, companies prospered as income inequality hit records on the backs of unemployed workers.

In 2014, we may be seeing the beginning of the third-phase of Mr. Obama's economic strategy — the part where the middle class benefits by getting jobs. My theory is that in this third phase, companies invest their cash in new products and processes that boost domestic employment

In 2004, I worked with current chairman of the Council of Economic Advisors, Jason Furman, in the failed presidential campaign to elect then-Senator John Kerry.

In the July 4 Washington Post, Mr. Furman wrote about the results of this third phase. "On [July 3] we learned that the U.S. economy added 288,000 jobs in June, concluding the largest first-half-year for job growth since the late 1990s. Meanwhile, the unemployment rate has fallen by nearly 4 percentage points from its peak of 10 percent in October 2009, with the pace of decline doubling in the past year to the fastest drop in nearly three decades."

It is too early to tell whether the third phase will let Mr. Obama leave office with economic growth exceeding 4 percent, at least 300,000 new jobs a month being created, and an unemployment rate below 4 percent.

But if that happens — and the stock market does not implode — Mr. Obama will go down in history as the best president the U.S. economy has seen in 90 years.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College. His email address is peter@petercohan.com.

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